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Twenty five years ago, to ask a company if they were on the internet was a legitimate question. Today, even the most Luddite companies have a web presence.

Ten years ago, to ask a company if they deploy BIG DATA to drive their decisions was also a legitimate question. But today, BIG DATA is as ubiquitous as the internet, and while people today would not ask if a company uses either the internet or BIG DATA – of course they do! – investors and employers alike are asking how well they are using BIG DATA.

But when asked what BIG DATA is, all too often we hear how it must be about lots of data. We have always been surrounded by data, so there must be something more to it, no?

In eighteen minutes, learn the least you need to know about datafication – a word so new that most spell checks still deem it a misspelled word. In a few minutes, understand enough about BIG DATA to explain it to others, including the three most fundamental shifts manifested by BIG DATA:

Most leaders inside the boiler room pave their way in pure technology plays. But some companies build their new competitive advantage upon the premise that most of us have moved so comfortably into the digital world that it has elevated analogue products to where they can now be monetized as luxury goods.

Vinyl recordings, excluding their content value, were commodities as a sound medium. Now they are an expensive, high-margin acquisition for audiophiles.

Think of how traditional analogue watches were gradually replaced with digital timepieces in the 1970s. Once the transition was nearly complete, traditional timepieces regained lost market share by repositioning themselves even further into the luxury market.

A hand-written note becomes treasured when most messaging is digital. (Image: Pixabay)

Fountain pens lost their dominant share of the market in the 1950s with the arrival of the ballpoint pen. Today, a fountain pen is a high-end luxury good with higher margins than their 1950s’ counterpart.

Inside the Boiler Room celebrates disruption. As disruption increases the efficiency and productivity of the market, disrupted industries can reposition themselves from high-revenue, low-cost commodities to high-end, high-margin luxury goods.

As communication is now almost exclusively digital, handwritten letters, especially those showcasing beautiful calligraphy, are even more valued by their recipients .

HR Avant-Garde spent timewith Kunal Sheth to see what he had to say about our premise on how, with enough disruption, analogue can sometimes trump digital with higher margins than before.

Vincent Suppa works with startups and investors and teaches graduate courses at New York University. His email is suppa@suppa.org.

In an age of ubiquitous digital communication, Fountain repositioned the hand-written greeting card for the high-end market.

Kunal Sheth has responded to the digital revolution by moving analogue into the luxury space. With digital communication now the default, Kunal empowers real estate developers and dutiful sons and daughters alike to send beautiful hand written cards to clients and parents, respectively.

As technology becomes more powerful, which HR specialties remain relevant in the marketplace? In our previous post, we illustrated why middle level management jobs are being decimated. Because most tactical HR jobs are in middle-level management, we are changing the paradigm of what constitutes an HR specialty to ensure skill security and earning power.

Strategy cannot operate beneath another strategy; the former is tactical by definition. With algorithms automating tactical executions using big data, people become less relevant to the process.

Computers excel at defined routine tasks. They play chess well. Yet even the best algorithms can’t innovate original strategies. We can transition HR from tactical executions beneath strategy by developing HR specialties along business strategies.

HR Avant-Garde has notable success mentoring HR protégées in disciplines as varied as big data and social media. While attending HR career fairs, they find themselves with few rivals. If you specialize in traditional HR functions, how many people are competing with similar skills? How much smaller is the applicant pool for HR experts specializing in pre-IPO startups requiring post Series A funding ramp ups?

An HR specialty in turnaround companies reorganizing under bankruptcy protection is another in-demand niche with few competitors.

How many of your colleagues have developed expertise in the HR complexities surrounding mergers and acquisitions? US companies are horizontally integrating into Asia and Latin America lacking HR specialists who can integrate and incentivize international teams around a coherent strategy.

This new paradigm of HR disciplines avoids being obviated by technology by centering on strategic business lines instead of HR categories. These neo-HR specialties with their business-line focus are in high demand while remaining in short supply, because they go against the conventional HR approach.

The Least You Need to Know:

Consider being the HR guru in these business specialties to give you a competitive advantage in a market saturated with conventional HR practitioners:

Pre-IPO Startups

Social Media

Big Data

Mergers & Acquisitions

Turnaround

Internal Marketing

Innovation

Companies horizontally integrating across boarders

Companies increasing or decreasing their vertical integration

Vincent Suppa works with startups and investors and teaches graduate courses at New York University. His email is suppa@suppa.org.

Computers excel at defined tasks. Tasks accomplished through explicit rules, no matter how complex, can be completed by software. This is why tactical jobs’ wages against inflation have decreased since the 1970s. Most middle management jobs are tactical and continue to be eliminated by algorithms feeding on Big Data.

Just as previous humanoids have become extinct to make way for modern man, the middle-level manager is a concept of the past. (Image: Pixabay)

Looking at transactional jobs as historical examples, consider the 1960s workplace and how voicemail and email has eroded the secretarial professions.

Middle-level managers reached pinnacle earning in the pre-computer age. Their function was not to generate strategy but in directing flows of information between worker bees and executives.

These jobs still exist, but with shrinking numbers and declining real wages. Jobs that cannot be done via explicit rules – manual labor and strategy creation – are safe from elimination and explain much of income inequality.

Many HR specialties are both middle management and tactical. They include recruitment, ER, compensation, benefits, training and HRIS. These functions remain vital, and as more intelligence is programmed into software, their value added will even increase. However, as technology requires fewer workers to accomplish more with less training, HR tactical specialists will continue to see their real wages decrease.

Even before the financial crisis of 2008, real wages for US workers were trending downward. (Image: Wall Street Journal)

Innovation comes about in two ways: creation of new technologies and recombining existing technologies. The US Patent Office’s Handbook of Classifications illustrates this point. The Patent Classification system includes classes and subclasses; the former contains creation of new technologies, while the later combines varying processes with different structural and functional features of existing technologies.

When new technology is invented, the USPTO issues a new single classification code. However, the majority of issued patents are not granted on the basis of new discoveries, but on recombining existing discoveries. Instead of a new single code, a new recombination of class and subclass codes is issued.

In the 19th century, half the patents were for single code inventions – new discoveries. In the 21st century, over 90% of patents are for inventions combining two or more codes – recombination.

Today’s innovations combine existing technologies in new ways by people who see new interactions in previously made discoveries. When Edison created the light bulb, we already had filaments, electricity and glass to create vacuums. It was Edison’s patentable recombination of previously discovered technologies that created the lightbulb.

Today’s patents are mostly recombinations. (Photo: Public Domain)

Figuring out how to recruit and incentivize talent responsible for each subcomponent across a startup’s value chain is what avant-garde HR professionals do before placing the right talent into optimal combinations.

By the time Tal Givoly created Medivizor, he had the sum total of medical science and the computer science of algorithms at his disposal. By recombining discoveries of these two broad disciplines across the apparatus of the internet, he created innovations with huge social gains for society supported by a sustainable business model.

Tal Givoly is disrupting the mobile health industry and how patients and caregivers use the internet. Why? He has a better way where medical information is personalized, updated, understandable, and most importantly, actionable for patients and their caregivers.

Givoly saw this need up close when he was looking for information to help save his daughter from congestive heart failure. His New York City-based startup, Medivizor, spares the patient hours of fruitless internet searches and enables healthcare providers to involve patients in managing their health in an effective way that serves both patient and doctor. Read more Inside the Boiler Room: Disrupting Barriers to Health Information

What differentiates a great business from an average one? (Image: Pixabay)

HR is not the most important entity companies compete on in today’s knowledge economy. It is the only one.

People were interchangeable in the old economy. (Photo: Public Domain)

In the industrial economy, firms generated net income by leveraging hard assets. Firms that made the best use of their land and machines made the most profits.

But we have now transitioned to a knowledge economy. Today’s most successful companies, born inside of dorm rooms, parents’ garages and family basements, today register some of the highest market capitalizations on record as they compete on their people instead of their hard assets.

How much land and machines does one need to code software, develop an app, or create an algorithm? What are the hard assets that Facebook, Google and Twitter required to create their value? The most pedantic response would be a computer, a device virtually considered a commodity.

In the industrial assembly line age, factory workers were interchangeable, performing redundant tasks as firms competed by leveraging hard assets, including their tools.

Tools are interchangeable in a knowledge economy that competes solely on people. (Photo: Vima.com)

In today’s knowledge economy, assets used to create value have become commoditized. The tools employees now use across competing companies generally include the same software and hardware. Most of us create value for our employers and customers using the same excel sheets and computer processors. In the knowledge economy, it is not the people who are interchangeable but the hard assets instead. Today people – not the assets they use – are the competitive advantage.

This makes every company, acknowledged or not, an HR company as they create value in the market place by recruiting, incentivizing, developing and yes, even in how they exist their people.

Regarding the old economy, additive manufacturing, nicknamed 3D printing, is ushering in the age of social manufacturing, a phenomenon that will commoditize the manufacturing economy itself, turning even those companies, into HR companies.

The least you need to know:

Companies historically competed on their hard assets with the bulk of their employees functioning as interchangeable commodities.

In today’s knowledge economy, the model is reversed; the tools firms use are now commodities as people represent their competitive advantage.

Vincent Suppa works with startups and investors and teaches graduate courses at New York University. His email is suppa@suppa.org.

Imagine the human resource professional walking through the hallways knowing that she was responsible for half of her company’s growth. Would knowing this change the conversations she had, the questions she asked and even the data she measured and observe? Wouldn’t it impact her entire perspective?

The formula for economic growth shows HR to have a bigger role in the business than many people realize.

One measurement of a country’s economic growth is its workforce multiplied by financial capital multiplied by productivity. Let’s equate a country’s economic growth with the firm’s incorporated under its flag.

Let’s consider the three multipliers of economic growth. HR is responsible for the firm’s human capital – the very essence of our beloved profession. It is fair to posit that HR’s wheelhouse includes none of the second multiplier, the company’s financial capital.

The third multiplier, productivity, arguably falls under the responsibility of both Chief Technology and Chief Human Resource Officers. A portion of productivity improvements is owed to deployment of more efficient technologies. Another portion of productivity, though, is due to how work is organized, how jobs are designed, and even how workers are incentivized against the company’s culture – all under the purview of HR.

HR owns half the formula for economic growth.

A more aggressive argument would maintain that even the technology portion of productivity is accomplished by employees that are recruited and incentivized by HR. But we are not haggling over an equation but arguing to influence the mindset of HR professionals by asking if they conduct themselves realizing how much of their company’s economic growth they own?

Bereft of that knowledge, the profession falls short. Armed with the mindset that half of the growth equation falls under its purview, HR can fulfill its true potential in leading their company’s growth.

Knowing this can change everything because if you adjust a canon by mere inches, it changes the trajectory of a cannonball by a mile.

The Least You Need to Know:

Three multipliers of economic growth are human capital, financial capital and productivity. HR arguably owns at least half of this equation.

Operating under this premise transforms the HR mindset to one of a business mindset with HR expertise.

Vincent Suppa works with startups and investors and teaches graduate courses at New York University. His email is suppa@suppa.org.

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Traditional CEOs typically sit in spaces befitting their leadership. Corner offices are coveted because they are far scarcer than one-window offices aligning the corridors. With fern plants graced along windows of two exterior walls, executives in corner offices have made decisions paving the way for the next generation of business leaders.

Our new leader rarely wears formal business attire. She works from her dorm room or maybe out of her garage. If she has scraped together enough money from angel investors, she’ll lead her team from an open space inside a boiler room.

While all business leaders thrive on uncertainty, our new leader thrives on ambiguity.

The boiler room is the least coveted office space. But it’s also a metaphor for an office with a potentially high ROI. The rent is low, but the upside can prove irresistible: monetizing the next great disruption that other boiler room entrepreneurs can leverage. Christopher Nolan wrote, “there is nothing more contagious than an idea.”

Because startups are rooted in the knowledge economy, there’s no better place for HR than inside the boiler room. With every startup using the same commoditized tools (computers and smartphones), people remain the last field of competitive advantage. Only human capital, through the generation of ideas, differentiates startups.

It’s not glamorous in the boiler room, but the attraction is the potential upside in dollars and impact. (Photo: elfgoh)

That is why HR belongs in the boiler room and why we feature Inside the Boiler Room to introduce innovative people striving to monetize business model disruptions.

The world needs startups because their innovations can democratize services and improve social welfare. Venture capitalists need startups to allocate their financial capital for a return on investment. And when the final algorithm automates the last vestige of tactical HR, our profession will find no better place to land than inside the boiler room.